Tailgate: Bill Smithers, Builder

The chief of CB/USA is working to organize the nation’s largest co-op for independent builders.

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Describe Custom Builders USA.

CB/USA allows custom and independent builders and remodelers to combine their buying power at the local level and get better pricing and service from vendors and suppliers.

We began group-purchasing through our custom-builders council in Northern Virginia in the late 1990s. We figured that if we bought our lumber together, maybe we could get a better price. That worked, and a group of us formed CB/USA to put some business systems behind the concept and to take it to other markets around the country.

How do you find new members?

When we go into a city, we are strongly referral-based. We find builders through our networks and affiliations. We get input from our national partners on the supply and manufacturing side. We now have 215 builder members in 15 cities and 700 vendors and suppliers, including ProBuild, 84 Lumber, Kohler, DuPont, Trane, Schlage, and Electrolux.

For both builders and vendors, we’re selective about who comes on board. We target builders who run their businesses well, have good reputations in the community, and pay their bills on time. It’s that last criterion in particular that tends to screen out a lot of them.

Once the group gets going locally, its members become the ones who help to screen the new builders, because builders tend to know who the rotten apples are in any one of our given markets. The best of the best find us because they are already open to new ideas that help them to produce a competitive advantage.

How have builders felt about joining forces with their competitors?

Initially, many builders are skeptical about their ability to work effectively with competitors. Many believe they are already buying at discounted levels and don’t see the need to combine their purchasing power with others. When we demonstrate how much more they can save by working together, they become believers. In addition to saving thousands on direct costs by combining forces, they can learn quite a bit from one another without sacrificing their individuality as builders.

How much can builders expect to save by buying through CB/USA?

Savings on a house or project vary by market and depend on which phases a builder buys through CB/USA. We’ve had builders tell us they’ve seen savings as high as $30,000 to $40,000 on a single house.

Here’s a recent example of before and after pricing from one of our new members. He had looked at CB/USA for a while, but believed he was already buying better than his competitors because of his volume. He placed his first lumber order in December and told us that he saved $6000 in comparison to his previous pricing. It was a large framing order, so the $6000 in savings was about 6% of the total price.

Have vendors been responsive?

Absolutely. From a vendor’s standpoint, our program is set up to be pay for performance. Vendors apply to be in CB/USA just like builders do, and they pay a small fee to join. They have to be sponsored by a builder in the group, so someone has to know them and know how well they work. Once they are on board, if a builder buys from them at the price that they set and pays them on time, then they pay a rebate back to CB/USA. If the builder doesn’t pay on time, they have no rebate due. From their perspective, it’s a no-brainer.

How have you organized the group’s expansion and growth?

The referral base plays into that. Some builders come to us and ask that we look at their market. For us, it needs to be a market that isn’t completely swallowed up by national builders.

We try to target cities where we think there is a healthy market and where builders are open-minded enough to see the advantages of working together. Essentially, we organize around builders who want to run their businesses better tomorrow than they did yesterday.

What support does CB/USA offer?

We provide our members with web-based technology for use in streamlining their purchasing procedures. CB/USA staff members manage all group purchasing activities for each city, including working with vendors, putting together committed purchase orders, and administering the rebate-collection process. We hold monthly group meetings in each city, we have an annual national leadership conference, and we recently kicked off a business-development webinar series.